> ## Documentation Index
> Fetch the complete documentation index at: https://docs.inkyswap.com/llms.txt
> Use this file to discover all available pages before exploring further.

# Liquidity Provision

> How liquidity works on InkyPump V2: automatic at bonding, optional add-ons after.

InkyPump V2 does not need you to provide liquidity for a new token. Liquidity is created automatically when the token bonds. If you want to LP after bonding, you can add positions to the V4 pool through the Uniswap V4 Position Manager.

## Curve phase: no LPs

While a token is on the bonding curve, there is no liquidity pool. The InkyPump V2 hook holds all ETH paid in and mints tokens out according to the curve. The price comes from the curve formula, not from a reserve ratio.

This means:

* No impermanent loss
* No LP tokens to mint
* No LP fees to earn
* You cannot add liquidity to a curve. There is nothing to add to.

## Bond event: liquidity is created automatically

When the curve fills, the contract creates a Uniswap V4 pool, pairs the raised ETH with the liquidity supply of tokens, and seeds the pool. This happens in one transaction. The full initial position belongs to the InkyPump hook, not to any individual LP.

This pool seed is permanent. The contract does not later withdraw it. There is no separate burn step. The seed is held by the hook.

## Pool phase: you can add LP positions

After bonding, anyone can add concentrated liquidity positions to the V4 pool through the Position Manager at `0x1b35d13a2E2528f192637F14B05f0Dc0e7dEB566`. Standard Uniswap V4 mechanics apply.

* You earn the 0.1 percent pool fee on swaps that hit your range
* You take impermanent loss if the price moves outside your range
* You can withdraw your position any time

This is optional. The pool works fine on the initial seed alone. LP positions are for users who want fee income or who want to support tighter spreads on a token they hold.

## Why V2 changed this

V1 used Uniswap V2 LP and permanently burned the LP tokens at bonding. This made the liquidity permanent but inflexible. There was no way to add concentrated liquidity, no way to vary fee tiers, and no way for the protocol to keep collecting fees on swaps.

V4 with the InkyPump hook keeps the same "no rug" property (the protocol does not pull the initial seed) and adds the flexibility of concentrated liquidity and ongoing hook fees that route back to creators and buyback.

## V1 liquidity for context

For how V1 handled liquidity, see [Permanent Liquidity (V1)](/legacy/lp-burning).